North Carolina is joining the growing number of states allowing for the formation of captive entities within their borders.
On Wednesday, Gov. Pat McCrory signed into law HB-473 that will allow the formation of all types of captives, including financial captives, in the state beginning in July.
The capital and surplus requirements for pure captives, in which one corporate owner insures its own or its subsidiaries' risks, and protected-cell captives specializing in insuring certain types of risks, are set at a minimum of $250,000. The same requirement applies to financial captives that insure finance companies.
The captives will be subject to a 0.4 percent state tax on direct premiums up to $20 million and 0.3 percent on direct premiums over $20 million. Reinsurance premium tax ranges from 0.225 percent to .05 percent, based on whether the captive's premium range is closer to $20 million or $60 million or more.
Reinsurance premiums of $40 million to $60 million will be taxed at a rate of 0.05 percent; the tax for reinsurance premiums of $60 million or more will be 0.025 percent.
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